UPSC CSE Prelims
Question 16
Consider the following statements :
Statement-I : Carbon markets are likely to be one of the most widespread tools in the fight against climate change.
Statement-II : Carbon markets transfer resources from the private sector to the State.
Which one of the following is correct in respect of the above statements?
View correct answer and explanation
Correct answer: B
Correct Option: B (Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I)
Explanation: Carbon markets can help price carbon and finance emissions reductions. Some regulatory market designs raise public revenue, but transferring private resources to the State is not why carbon trading limits emissions.
Statement / Pair / Item-wise Analysis:
I. Correct/True - Emissions trading and carbon credit markets are prominent tools proposed for climate mitigation.
II. Correct/True - Auctioning carbon allowances or levying related charges may transfer private-sector funds to government.
Option-wise Analysis:
A. Incorrect-although both statements are true, II does not explain I.
B. Correct-both are true but II does not explain I.
C. Incorrect-Statement II is true, not false: Auctioning carbon allowances or levying related charges may transfer private-sector funds to government.
D. Incorrect-Statement I is true, not false: Emissions trading and carbon credit markets are prominent tools proposed for climate mitigation.